Pathmark amends loan, changing leverage, coverage, EBITDA ratios

By Sara Rosenberg

New York, Jan. 31 - Pathmark Stores Inc. amended its credit facility, increasing the maximum permitted leverage ratio through fiscal 2004 (see table 1), decreasing the minimum consolidated interest and rental expense coverage ratio through 2004 (see table 2), decreasing the minimum permitted consolidated EBITDA through 2004 (see table 3) and adding a minimum fixed charge coverage ratio covenant that requires no less than 1.00 to 1.00 for any four-fiscal-quarter period. JPMorgan Chase Bank is the administrative agent on the loan.

The company also agreed that by March 30 it will give the lenders a lien on properties acquired after the effective date of the credit agreement, according to a filing with the Securities and Exchange Commission. Furthermore, the company will assist the agent in a review and evaluation relating to its real property assets.

In return for the amendment, the Carteret, N.J. supermarket chain has agreed to increase the commitment fee on the revolver by 25 basis points and increase interest rates, which are based on leverage, by 50 basis points (see table 4).

Table 1: Pathmark's new leverage ratio covenant

Period Leverage Ratio

Effective date through fourth quarter of fiscal 2001 4.25 to 1.00

First and second quarters of fiscal 2002 3.75 to 1.00

Third and fourth quarters of fiscal 2002 4.00 to 1.00

First, second and third quarters of fiscal 2003 4.25 to 1.00

Fourth quarter of fiscal 2003 through second quarter of fiscal 2004 4.10 to 1.00

Third and fourth quarters of fiscal 2004 3.90 to 1.00

Fiscal 2005 2.75 to 1.00

Thereafter 2.50 to 1.00

Table 2: Pathmark's new consolidated interest and rental expense coverage covenant

Period Ratio

Effective date through fourth quarter of fiscal 2001 1.40 to 1.00

Fiscal 2002 1.45 to 1.00

Fiscal 2003 and first and second quarters of fiscal 2004 1.45 to 1.00

Third and fourth quarters of fiscal 2004 1.50 to 1.00

Fiscal 2005 1.65 to 1.00

Thereafter 1.70 to 1.00

Table 3: Pathmark's new EBITDA covenant

Period Minimum consolidated EBITDA

Effective date through third quarter fiscal 2000 $170 million

Fourth quarter of fiscal 2000 through fourth quarter of fiscal 2001 $160 million

First, second and third quarters of fiscal 2002 $170 million

Fourth quarter of fiscal 2002 $160 million

First, second and third quarters of fiscal 2003 $155 million

Fourth quarter of fiscal 2003 through second quarter of fiscal 2004 $160 million

Third and fourth quarters of fiscal 2004 $165 million

Fiscal 2005 $210 million

Thereafter $220 million

Table 4: Pathmark's new interest rate

Leverage Ratio Revolver and Term A Term B

Greater than or equal to 3.00 to 1 3.50% 4.50%

Less than 3.00 to 1 but greater than or equal to 2.50 to 1.00 3.25% 4.25%

Less than 2.50 to 1 but greater than or equal to 2.00 to 1.00 3.00% 4.25%

Equal to or less than 2.00 to 1.00 2.75% 4.25%

Rates are margin over Libor

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